The union has rejected a proposal to cut salaries from the end of November, as Denel battles to stay afloat after noting a R1.7bn loss for financial 2017-2018

Members of union Solidarity at struggling state-owned arms firm Denel have rejected a proposal to cut their salaries by about 20% from the end of November, the union said on Monday.

Denel is battling to stay afloat after reporting a R1.7bn loss for the 2017-2018 financial year.

The company, which makes weapons, missiles and armoured vehicles for SA's armed forces and clients in Africa, the Gulf and Europe, was late paying managers and specialists their full salaries earlier in 2018 because of a lack of liquidity.

Solidarity, which represents about a quarter of Denel's workforce of 4,000 people, said in a statement that selling equity in Denel was the only way to save the company.

"Privatisation or partial privatisation of Denel is the only thing that will prevent the total collapse of Denel, not the proposed 20% savings on employees' salaries," Solidarity deputy general secretary Johan Botha said.

Denel did not immediately respond to a request for comment.

The company is one of a handful of state firms that became embroiled in corruption scandals involving the Gupta family.

President Cyril Ramaphosa said last week that Denel was "ripe" for joint-venture partnerships but the government would want to retain control if any stake sale went ahead.